Cities Want Way Out Of Retirement System

November 12, 1989|By Karlayne Parker of the Sentinel Staff

The cities of Eustis and Umatilla are among 40 cities statewide that will ask the Legislature next year to pass a law allowing them the one-time option to get out of a state retirement system that they say is too costly.

Both cities have been in the Florida Retirement System since its inception in 1970. The system is a combination of several plans for state public employees.

Under current law, all public employers belonging to the retirement system cannot get out of the plan.

But a bill expected to be introduced during the spring legislative session would allow those public employers a one-time option to get out of the plan and replace it with another type of retirement benefit plan.

Eustis city officials last week adopted a resolution concerning the issue and plan to send it to state Sen. Dick Langley, R-Clermont, Rep. Stan Bainter, R-Eustis, and Rep. Everett Kelly, D-Tavares.

''This is something that we have been asking for for the past six or seven years,'' said Jim Myers, Eustis city finance director. ''The benefits have become a fairly large expense.''

The 1970 law required that the employer and employee both contribute 4 percent to the system. However, six years later, legislators put the burden of payment entirely on the employer.

Next year, employers will be expected to pay up to 15.14 percent of an employee's salary to the fund. That percentage is expected to increase to as much as 17 percent by 1992.

For Eustis, that would mean paying out about $370,000 to the retirement fund during the 1989-90 fiscal year.

Cities belonging to the system have cited several other reasons for wanting a change in the law.

These include: not feeling like they have control over the retirement fund, feeling like they are burdened with other contributions including Social Security, and that an option-out law would have little effect on the funding of the system.

Regina Bryant, administrator for research, education and policy at the state retirement bureau, agreed. However, Bryant said the contribution rate for those public employers remaining in the system would increase.

''If a law were passed, it would definitely set a precedent. And it would have to be more than a one-time option out,'' Bryant said.

Currently, Bryant said about $147 million is contributed to the fund annually.